Slide 1: Codan Investor Presentation: Results for the half year to 31 December 2016
CODAN INVESTOR PRESENTATION Re s u l t s f o r t h e h a l f y e a r t o 31 D e c e m b e r 2 016 For personal use only Donald McGurk Managing Director & CEO Michael Barton Chief Financial Officer Sarah Emms Manager, Investor Relations 27 February 2017
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER For personal use only Disclaimer This presentation has been prepared by Codan Limited (ABN 77 007 590 605) (Codan). The information contained in this presentation is for information purposes only and is not investment, financial product, legal or tax advice. This pres
Slide 3: Technologies for Global Markets
TECHNOLOGIES FOR GLOBAL MARKETS For personal use only Headquartered in South Australia, Codan is an international company that develops rugged and reliable electronics solutions for government, corporate, NGO and consumer markets across the globe Our purpose is to create long term shareholder value
Slide 4: Delivering Shareholder Value Over the Long Term
DELIVERING SHAREHOLDER VALUE OVER THE LONG TERM For personal use only Shareholder value We succeed by: ‐ Developing unique, high value technology ‐ Delivering superior product performance in the harshest conditions ‐ Solving customers’ safety, security and productivity problems ‐ Creating multiple r
Slide 5: Strong First Half: Sales, Profit and Dividend Up
FY17 1H STRONG FIRST HALF: SALES, PROFIT AND DIVIDEND UP For personal use only Half year results Revenue increased 60% on prior first half Net profit after tax $22.2 million - up 265% on the prior first half Underlying earnings per share of 12.4 cents Interim fully franked dividend 3.0 cents, up 50%
Slide 6: Dividend
DIVIDEND Interim dividend up 50% + special dividend For personal use only 3.0 Board maintaining 50% dividend payout ratio Special dividend reflects outperformance in the first half Strong sales of GPZ 7000® gold detectors into African market Interim and special dividend will be paid together: Record
Slide 7: Business Unit Update
BUSINESS UNIT UPDATE A diversified portfolio of robust technology solutions For personal use only High Frequency (HF) and Land Mobile Radio (LMR) systems for reliable communications in harsh environments World’s best metal detecting technology for finding gold, treasure and land mines Highly accurat
Slide 8: Radio Communications
RADIO COMMUNICATIONS Successfully transitioning to full solutions provider For personal use only Radio Communications revenue Revenue increased 20% and segment contribution increased 24% over prior first half Large HF project delivered in first half LMR sales softened due to lower US government dema
Slide 9: Radio Communications: Continuing product line expansion
RADIO COMMUNICATIONS Continuing product line expansion For personal use only New HF products for global Military market: Sentry-V military VHF radio available from June 2017 Sentry-H military HF radio available from March 2017 Stealth Telecom 9600 series antenna acquired January 2017 9
Slide 10: Radio Communications: Continuing product line expansion
RADIO COMMUNICATIONS Continuing product line expansion For personal use only New land mobile radio products support transition to solutions provider: Cyclone repeater can replace any repeater or base station on any network Remote site monitoring for low power, legacy repeater line Stratus transporta
Slide 11: Metal Detection
METAL DETECTION Strong Minelab gold detector sales For personal use only Metal Detection revenue Revenue increased 93% and segment contribution increased 256% on prior first half Growth driven by strong GPZ 7000® gold detector sales into Africa African customers upgrading from GPX series Geographica
Slide 12: Metal Detection: Large GPZ coil released in developed markets
METAL DETECTION Large GPZ coil released in developed markets For personal use only Released in Australia November 2016, global release February 2017 Gold finds driving product uptake in Australia Additional accessory for owners of GPZ 7000® gold detector Features: Deeper detection (average +30%) Mor
Slide 13: Metal Detection: Gold Monster release in second half
METAL DETECTION Gold Monster release in second half For personal use only Entry level specialist gold detector For recreational enthusiasts and small-scale artisanal gold miners RRP less than US$1,000 Price point below that of GPX Designed specifically for Artisanal gold mining Rugged and easy to us
Slide 14: Tracking Solutions
TRACKING SOLUTIONS Unique offering with steadily increasing customer base For personal use only Small operating profit in the first half Targeting underground hard-rock gold, copper and diamond mines in Australia and South Africa Numerous installed mines, critical reference sites for further sales $
Slide 15: Significant Revenue and Profit Growth
SIGNIFICANT REVENUE AND PROFIT GROWTH For personal use only Sales growth across all business units Sales up 60% EBITDA up 153% Profit margins continued to increase Revenue EBITDA $ millions $ millions All profitability measures refer to underlying profit Revenue from discontinued operations has been
Slide 16: Underlying NPAT
UNDERLYING NPAT Continuing to improve profit margins For personal use only Underlying NPAT $22.2 million, up 219% over same period last year NPAT to Sales % 7% 9% 12% 21% 16
Slide 17: First Half Profits Outperformed Expectations
FIRST HALF PROFITS OUTPERFORMED EXPECTATIONS For personal use only Underlying business performance Half Year Dec 16 Half Year Dec 15 $m % to sales $m % to sales Revenue $103.9 100% $65.0 100% Underlying business performance EBITDA $37.1 36% $14.7 23% EBIT $30.3 29% $9.0 14% Net interest ($0.5) ($0.8
Slide 18: Engineering Investment
ENGINEERING INVESTMENT Continuing commitment to product development For personal use only Engineering spend ($m) Engineering spend (% sales) Engineering spend reflects additional $5 million LMR investment in FY17 Expect to move closer to long-term average spend (8-9% of sales) over the medium term I
Slide 19: Balance Sheet
BALANCE SHEET For personal use only Debt-free balance sheet provides flexibility Inventory increase due to rebuilding stocks of metal detectors Net debt eliminated as the business generated $20 million free cash flow over the half Debt facility reduced from $85 million to $55 million Dec-16 Jun-16 $
Slide 20: Key Ratios
KEY RATIOS For personal use only Underlying earnings per share (cents) Free cash flow ($m)2 Return on equity (%)1 Gearing (%)3 1Return on equity calculated as net profit after tax divided by total equity 2 Free cash flow = operating cash flow + interest – cash outflow for product development, IP acq
Slide 21: Outlook
OUTLOOK For personal use only The Board in November 2016 provided FY17 guidance of $30 million to $32 million We are experiencing a strong start to the second half in gold detector sales Not expecting Radio Communications to repeat its strong first half Minetec will deliver a small full-year profit